Monday, April 30, 2012

Cals Refineries Not Been Suspended, BSE Says Now



D Sundararajan,
Managing Director,
Cals Refineries Ltd.

By Staff Reporter:

Bombay Stock Exchange on Monday, 30th April 2012, clarified that it has not suspended Cals Refineries Ltd (BSE: 526652), as it had announced it would do, during late March.

The much-awaited announcement for the company’s investors was made by BSE after trading hours on Monday, and 10 days after the announced suspension was to take effect on April 20th.  

In a bizarre twist of events, Cals Refineries had continued trading even after 19th April and even after 26th when the suspension was to be revoked in companies complying by that time, with no kind of communication by BSE regarding this company.

StockExplain had queried the company management multiple times during this confusing period of events, and they had informed that they too were in receipt of no communication in this regard.

Even on 20th, when the scrip continued trading, the company had replied to our query that, “We have not received any communications from BSE so far. It seems that BSE has considered our request.”

Asked about what was the request and what was the compliance issue raised by BSE, Cals Refineries has replied that it was to do with Clause 41(1) of the Listing Agreement which stipulates that quarterly financial results should be submitted. StockExplain had earlier reported that this could be one of the issues involved in the affair.

But as per a sub-clause viz. Clause 41(iv)(e), it is widely known that companies with primary projects under implementation are not required to submit quarterly financials, but just a project progress report. Cals was hitherto enjoying this exemption.

Queried by StockExplain on what has changed now, the company has replied that, “We are submitting the project progress under Clause 41(iv)(e) of the listing agreement since the project is under implementation. We are not required to submit financial results under Clause 41(1). Company has clarified this regularly.”

So, what went wrong? Cals has replied that, “BSE did not go through our progress reports being filed at the end of every quarter and they put our name under non compliance of Clause 41 for financial results.”

BSE’s notice on Monday on the matter seems to confirm this. It states that, “…the trading in the equity shares of the below mentioned scrips have not been suspended since these companies were compliant with the relevant clauses of the listing agreement : 1) Cals Refineries Ltd. (526652)…”

In any case, it goes without saying that the apparently erroneous suspension notice as well as the lack of a revocation notice in time was enough to panic many investors in the counter, who were already reeling after a SEBI investigation unearthed serious manipulation by way of GDR cancellations in the stock. 

There is a high probability that many investors would have sold off after the BSE notice announcing the suspension came.

SEBI’s final order on the company is keenly awaited by investors, as that would set the future direction for the stock. 

This is because, the primary regulatory action on the scrip has been a bar on further equity expansion, while the projected business plan of the company mainly revolves around an equity expansion through GDR n favour of Vienna based Hardt Group in lieu of they supplying two used refineries from USA and Turkey towards the project.

SEBI is suspecting that there was serious manipulation in the massive sell-off of the company’s earlier GDR, which resulted in Cals Refineries becoming a pennystock and thousands of retail investors losing much of their investments. 

The latest hearing in the case was on 3rd April, when the Managing Director of the Company attended the hearing pursuant to the summons issued by SEBI and replied to the queries raised by them.

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